The 2024 Nobel Prize in economics was awarded to professors Daron Acemoglu, Simon Johnson and James Robinson. The first two made their name with the book Why Nations Fail and all three developed the themes that were explored in the book.
In essence, their argument, building on the work of Douglas North, is that economic institutions play a fundamental role in explaining the differences in economic development between countries. They argue that economic institutions encourage economic growth. Inclusive political institutions allocate power to wide sections of society, broadly protecting property rights and creating effective constraints on power holders so that these power holders capture few if any, rents.
They argue that, notwithstanding the economic success of China, as an authoritarian regime, for a variety of reasons it will have a much harder time than democracies in sustaining long-term innovative outcomes. Democracy and adherence to the rule of law are critical in the long run for the successful economic development of a country.
One hopes that when President Cyril Ramaphosa meets with his business colleagues and they boast about the possibility of a 3% growth rate by 2025, they have read this body of work. As many have observed, business in South Africa has never seen a government it does not like. It has hardly been a resilient defender of the rule of law and the institutions which are the guardrails thereof.
Likewise, the President, who has spoken of expansive numbers with regard to growth and infrastructural development, all of which are important, seldom pays attention to the rule of law and the institutions that underpin it.
The core focus of sustainable development must include the building and sustaining of resilient institutions, to which far too little attention is paid. Yet this is where South Africa should start.
Let us examine a few key examples. Admittedly, the National Prosecuting Authority (NPA) has shown some signs of life. However, as has been noted in many reports, it has continued to disappoint in failing to deter the spread of corruption.
It is for this reason that the Centre for Development and Enterprise, on 26 September, recommended, as a matter of urgency that the President appoint a retired judge to head an inquiry into the NPA.
https://www.dailymaverick.co.za/article/2024-10-01-the-npa-needs-energising-and-beefing-up-if-we-want-to-achieve-a-capable-state/
The goal would be to identify the causes of the NPA’s lack of performance and to recommend remedial action. While there has been considerable mention of the NPA entering into public-private partnerships to ensure greater capacity with regard to data specialists and forensic experts, the rhetoric seems to exceed the reality.
Few, if any, high-profile politicians documented in the Zondo Commission’s report have been prosecuted, let alone convicted.
While the Judicial Service Commission (JSC) seems to have performed better in its previous two sessions, there can be little doubt that the judiciary needs to include a significant complement of judges who have the necessary expertise. Major gaps within the judiciary exist insofar as expertise in key areas of law are concerned.
Deeply disturbing
The fact that the Constitutional Court has been unable to fill a vacancy because the JSC has not received a minimum of four applications to fill one post is deeply disturbing. While, in the October round of interviews, there were excellent appointments which straddle the demographic character of South Africa, it would be naïve not to observe that the vast majority of the most talented lawyers in South Africa, sourced at the Bar, the Side Bar, the NGO sector and the academic profession, have not made themselves available.
In the latest round, the most distinguished applicant for a position on the Western Cape High Court, Johan de Waal SC, withdrew his application at a time when that court is desperate for expertise across the entire legal terrain. This will hardly encourage other distinguished lawyers to apply.
These interviews also revealed the destruction caused to a key component of the judiciary, the Western Cape High Court, under the then leadership of John Hlophe. For years the JSC dilly-dallied on the sustained case against the then Judge President until, sadly, it was too late. This case is a luminous example of the ease with which a key institution can be destroyed.
Notwithstanding the formation of a Government of National Unity (GNU), there is still considerable doubt as to whether Parliament will improve its role in holding the executive accountable to the Constitution and its commitments. There is little sign of Parliament assuming its key role in the implementation of the doctrine of separation of powers. That doctrine dictates that Parliament holds the executive accountable to its constitutional commitments, but “business as usual” appears to continue to be the parliamentary motto.
While the President enjoys tea with senior business leaders and they speak about infrastructural development, none of these key institutions appears to represent their central focus. One wonders, for example, whether these business leaders implored the President to suspend his minister of justice pending a comprehensive investigation into the damning allegations against her.
It is all very well to talk about the fight against corruption. However, if the rule of law and the fundamental institutions upon which a democracy is built and economic development predicated are to be reproduced in South Africa, the government has to show a fearless attitude to curbing corrupt practices, notwithstanding their source or identity.
The same institutional demand is required to ensure the very best people in South Africa are appointed to critical public sector jobs. Cadre deployment is surely not the only or indeed the best way to ensure the continued transformation of the public service.
There is a desperate need to attract the very best in South Africa to fill these critical roles and to ensure that state institutions are resilient in the face of potential nefarious activities. Take the conduct of the erstwhile official opposition. Within a month of the GNU, the country saw the DA leader employ Roman Cabanac as his chief of staff. That he later was forced to say “oops” is hardly comforting. The portents are a cause for concern.
These are a few illustrations of a failure to grasp the paramount role of institutions in the path towards inclusive economic development. Much is spoken, and correctly so, about infrastructure and ensuring that the electricity supply is reliable and the ports and the rails are fully functional. If the Nobel Prize winners for 2024 are correct, resilient democracy has to be predicated on the rule of law and a commitment to the principles of accountability, integrity and openness which are enshrined in our Constitution.
Institutions matter.
If inadequate attention is paid to them, then the prediction must be that over the medium term, at the very least, sustained economic development in South Africa will be stillborn.
Can we please pay attention to the core institutions which underpin our society rather than optimistic and illusory numbers which never seem to emerge into economic reality? DM